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    Home Unlabelled Real Estate: First Time Home Purchase Went Completely Sideways

    Real Estate: First Time Home Purchase Went Completely Sideways

    June 24, 2020

    Real Estate: First Time Home Purchase Went Completely Sideways

    First Time Home Purchase Went Completely Sideways

    Posted: 23 Jun 2020 03:03 PM PDT

    My wife and I recently had our first child and our one-bedroom apartment in Seattle was feeling a bit cramped, so we started to look during the middle of the pandemic. Here's what happened:

    -

    The Offer

    We found a house that was in our price range that had been used primarily as a rental for the last 10 years or so. The house had sat on the market for a few months (a long time for the area) and had already dropped the asking price by $20k. Looking at comps, I thought it may still be overpriced by about $50k or so. Through the channel of our real estate agents, we were told that the sellers would be willing to drop another $20k. I felt uneasy about the higher price, but my wife wanted the house so we offered what we thought would get the sale.

    The sellers countered "actually, nope" - they really wanted the full asking price, and would pull the house off the market if they didn't get it. We stayed firm, the seller pulled the house from the market on a Friday and put it up for rent.

    -

    The Counter

    The following Monday, the sellers call back and say that they're willing to meet us in the middle. Up $10k from our offer, down $10k from their listing. They also wanted a pass/fail inspection, for us to waive the information verification period, drop the COVID-19 delay addendum, and raise the amount of earnest money. We were mildly annoyed but had seen that the house was in good shape, so we agreed to those terms.

    -

    The Financing

    Before we put down an offer I had connected with the mortgage lender that my real estate agent had recommended. However, the rate that he could offer wasn't competitive for a Jumbo, so I went to a few of the big banks. Chase had the best rate - a 30 year fixed at 3.125%. Add in 1/8% incentive for a brokerage transfer and a 1/4% buy down (4-year breakeven) and the rate came out to 2.75%. Pretty darn good for a 30-year fixed rate.

    -

    The Hiccup

    We used my wife's salary to qualify for the loan. After we had prequalified and gone under contract with the seller, Chase asked for her employment offer letter which we sent over. At my wife's employer, it is standard to offer a 2-year contract, and then renew into a long-term position. As a result, the loan review had to go to Chase's "Specialty Underwriting." After it was reviewed, Chase was still able to make the loan but wanted to charge an extra $2k in closing costs - leaving us with a fee rather than a credit. I found this pretty annoying, but not a deal-breaker, especially considering the stellar rate Chase was able to offer.

    -

    The Mistake

    Here's where I screwed up.

    The Friday a week before the close rolls around, and it occurs to me that I better start liquidating assets and transferring them to Chase in order to qualify for the Brokerage Transfer Incentive. For the down payment, I put in a sell order on two mutual funds at 1:12pm Pacific on a Friday. At the same time, for the rate incentive, I initiate the brokerage to brokerage transfer into JP Mortgage/Chase. Big mistake.

    Since my mutual fund sale order was put in after market close, the sale would not take place until the following Monday. Further, since I submitted to Chase for a brokerage to brokerage transfer, the entire account was locked up. I wasn't able to transfer any cash into a checking account so that I could get it to escrow. That money wasn't going anywhere until it hit Chase Bank.

    Calling the service hotlines I got all kinds of answers: The money would be at Chase on Thursday. The money would be there by Wednesday. The securities would be there Wednesday but the cash would take longer. It would be there Friday but it might be locked up for two weeks.

    Ultimately, the cash hit on Friday (the day that "cash sweeps" are transferred). Friday was supposed to be my closing.

    On the Tuesday before closing, when it was clear that I wasn't going to be able to close on time, I called my agent to let her inform the buyers. "No problem," she said, "delays aren't uncommon, just move it along as quickly as you can. I'll write up an addendum for a closing date next week."

    -

    The Firing

    As if the transfer delay wasn't bad enough, two days before closing I get a call from another lender at Chase. It turns out my original lender, who I had been working with for the last month, had been called into a 4pm meeting to let him know that, after over a decade, Chase would not be needing his services. According to him, the reason given was that he had been too aggressive getting his low rates for his clients. And just like that, he was gone.

    -

    The Freakout

    I think it's fair to say that the sellers did not meet the news of a 3-5 day closing delay with grace and understanding.

    First, they demanded that Chase compensate them for the lost time. Chase politely said "Lol no."

    Then they asked us for a full release of the earnest money and $150 per diem. We agreed that we could cover the per diem, but could only release $5k of the earnest money.

    Then they wanted half of the earnest. We said no.

    We offered $10k of the earnest money and the per diem, they said no.

    Then they gave us an ultimatum. Make a choice: half the earnest money, the $150 per diem, and waive the finance contingency and be ready to close on Thursday. Take it, or walk away "cleanly" from the sale with the entirety of the earnest money returned to us, the buyers. And tell them by 9 pm.

    I spoke to my (new) lender at Chase who said that she could virtually guarantee that we would get financing, but that delays do sometimes happen in the last steps of the process. Under their addendum, if the closing was delayed by 4 days, there would be no problem. If it was delayed by 5 days, we would lose the entirety of our earnest money - money that we needed to buy a house. Our hand was forced. An email I wrote to the sellers explaining our situation went unanswered. We signed the termination of the contract at 8:59 pm.

    The seller's agent sent the termination to escrow. Escrow let me know I could come to pick up my check.

    -

    The Aftermath

    Like some Greek tragedy, the wheels of mortgage approval keep turning the next day at Chase. There would not have been another delay, the financing would have closed by their extension.

    By noon, they had completed the final approval of the loan and were ready to send it to escrow. Escrow, who had already been informed that the sale was canceled, stared blankly at the documents and sent them back (or so I imagine.)

    I called my current landlord to let him know that the sale fell through. He had already found a new tenant for our apartment, who is slated to move in mid-next-month. That leaves me with a very unhappy wife and three weeks to find a new place for me, my wife, my daughter, and the dog. Wish me luck.

    -

    -

    tl;dr After a long and painful home buying process, a delay in closing leads the sellers to force a cancellation of the sale. Also, don't wait until the week before closing to start liquidating assets.

    submitted by /u/howdy_throwaway
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    Selling our condo and buying a house during a pandemic - what are our best options?

    Posted: 24 Jun 2020 07:27 AM PDT

    We bought a condo 3.5 years ago, but for a variety of reasons our downstairs neighbors are not people we want to continue to live above. We bought our condo pretty cheap (very motivated sellers) and redfin/Zillow etc. have it estimated at $80-90k above what we paid. We are in a pretty hot market/neighborhood and condos in particular are very desirable in our town. We have a 3 bed/2 bath and are looking for a similar sized house.

    We'd like to buy a single family, especially after our bad condo experience and because this pandemic opened our eyes to how important outdoor space is. However, we're not sure the best way to go about it. Which option is likely best during this?

    1) Buy a house contingent on the sale of our condo.

    2) Sell our condo contingent on purchase of a house

    3) Sell our condo and move in with our in-laws temporarily while house hunting (they've offered but it's not ideal, they are in the "at-risk" age group and live 60-75 minutes depending on traffic from my husband's job and our daycare.)

    4) Sell our condo and try to find a month to month place, AirBnB, etc. in town to rent (seems like this option would potentially result in us losing quite a bit of money.)

    submitted by /u/StregaCagna
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    Points on all Mortgages right now?

    Posted: 24 Jun 2020 06:36 AM PDT

    We are closing on Aug 7, lender is saying that all mortgages right now have points built in. Just want some feedback if others are hearing this too, or our guy acting shady?

    30yr, 2.875 with 1.828 origination or $9,291 regardless of 20% down

    Thanks in advance

    submitted by /u/Puggoldie8
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    Insurance coverage for property with previous sinkhole claim

    Posted: 24 Jun 2020 07:17 AM PDT

    I'm about to sign a contract for a new home. The seller disclosed that "water was coming inside around the kitchen area and a contractor dug a hole to repair. For this reason, claim was treated as a sinkhole but wasn't really a sinkhole."

    How will this effect my homeowner's insurance if I buy the property?

    I got some quotes from local agents without issue (Didn't mention previous sinkhole claim). Is this not a big deal or will an insurance company cancel my policy or deny coverage because of this at some point in the future?

    submitted by /u/romanX7
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    How to pump the breaks with a pushy agent?

    Posted: 24 Jun 2020 08:13 AM PDT

    Okay, I've been prepping to buy a house for the past few months and last week I was preapproved for a few different loans from a few different banks, all of which are roughly the same price. I got in contact with a realtor recommended by one of the banks and she started talking about houses. Since then, everything has been going at lightning speed. My real estate would have us making an offer and signing tonight if she could (which I know is her job but). I feel like I just need half a second to breathe and make sure I'm making all of the right decisions. I don't have any houses so far that I've liked enough to buy, so I won't be missing out on anything if we slow down, but she is being super pushy. I thought I was %100 set on the type of financing and mortgage I was going to look into, but I recently found different options I think would fit me better. How do I get her to chill without seeming noncommittal or like I'm dragging her along? I'm definitely still aiming to buy a house within the next three months, I just need a minute to reevaluate my loan options and make sure I'm making the right choices. Do I just tell her to stop looking and that I will contact her again when I'm ready? If she keeps being aggressive and pushy, what's best practice when going to a different agent/agency?

    submitted by /u/Smemerline
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    Should you be excited for a house you see before you decide to put in an offer?

    Posted: 24 Jun 2020 07:25 AM PDT

    FTHB here. I have seen a few houses where they check off the 20 items on my list and are GREAT on paper. BUT I just don't feel excited when I see it and it doesn't "feel like home" right away.

    Whereas other homes maybe they check off on paper quite as nice BUT they just feel like home on the first showing in the first 10-15 seconds.

    What has been your experience when deciding which home to go for? Did you feel excited to put an offer on a place? Or did the excitement come later through the process?

    Edit: not that it matters but I'm in a HCOL area with a sellers market

    submitted by /u/trowaway_0
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    Inherited a house. Should I take the time to repair it?

    Posted: 24 Jun 2020 11:04 AM PDT

    Alright so recently I inherited a 2bd/1b house from my uncle who lived roughly 600 miles away. I had business not to far from there and decided to drop by just to see what I was dealing with and I was kind of overwhelmed, but quickly realized it may not be as bad as it seemed. There are quite a few holes in the drywall, the kitchen cabinets are trash (they're sagging and appear to be made of particle board),and most of the floors are bare sub floor that needs to be scraped down because there's....I don't even know.. all over them. The only redeeming thing to the house that makes it not look like an abandoned 70s home is the large rock shower with sliding glass doors and tiled bathroom, somehow it's nearly immaculate, but small due to the shower being rather large.

    My question on this would be, should I bother sinking time and money into doing these kinds of things to the house? The foundation is good and there's no obvious electrical/plumbing/structural problems.

    The reason I'm asking is because I've recently started saving to buy a house in my area for a while and currently have my eye on a really nice 3bd/2b house and I figure if I could put a lower amount of money into the house I could have more toward a down payment once it sold. I feel like either way I could make a small amount ($10-$15K) but I'm wondering if it would be a better idea to put in a little work.

    ​

    (I HAVE background in carpentry and I have friends in that area who have told me they would help me do anything I needed to so I wouldn't be paying much for labor, I've just never personally "flipped" a house or know if it would even be worth it for such a low value home)

    submitted by /u/MyMainIsGuilded
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    Buying an investment property for the first time using other rental income as income, but rates are much much higher than usual. [Atlanta, GA, USA]

    Posted: 24 Jun 2020 10:56 AM PDT

    Hey everyone,

    I've got 4 investment properties that I've got pretty good rates on, but I've now hit the point where my debt to income ratio prohibits me from buying more based on my job salary. I'm making $600 of profit on each of the 4 properties rent, so I've found a mortgage company that is willing to take that into consideration as my income. However, the rate they have quoted me is 3.99% with 2 points, 20% down.

    All of my other properties (all purchased between Nov 2019 to March 2020) were lower rates and less points. Is this just because they are using my rental income? Shouldn't the rates be lower than this right now? I've tried to find other lenders that will accept the rental income as actual income, but they are all telling me I have to have the property for a year before I can use that.

    Thanks in advance.

    submitted by /u/rockstarnights
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    Looking for advice on this new(?) trend for properties in DC.

    Posted: 24 Jun 2020 10:02 AM PDT

    First time buyers. Furnace has passed two of seller's inspections and failed two of ours, what to do?

    Posted: 24 Jun 2020 09:57 AM PDT

    The house is 14 years old, in the Canadian prairies. It is undervalued compared to the neighbourhood/features.

    We outbid a competing offer at 10k under asking, with a pre-approval guarantee from our lender. The sellers are in a rush to move as they are moving out of the country in a couple weeks.

    The contract says the water heater is being sold as-is (original 50gal needs replacing soon but no signs of cloudy/rust out of the hot water taps), we agreed so we could move forward with inspection.

    The original high efficiency 1-stage furnace was not mentioned in the contract. However when we went for a general inspection there was an HVAC report on the kitchen counter from just weeks ago stating that there was a leak in the furnace cabinet causing corrosion, that the leak had been fixed, and that all other aspects of the furnace passed inspection. Our inspector was horrified with the level of corrosion in the control cabinet (like an old cast iron), saying it likely needs replacement, and recommended a specialist. So we asked the seller to extend the escrow to allow for further inspection.

    The seller brought another HVAC specialist for a second opinion and said the problem has been fixed and besides maybe leveling the furnace a bit there's nothing else to do.

    We brought in an HVAC specialist today. Here's what he said:

    • There was a leak from the water source into the cabinet which has been patched/fixed recently.
    • There is no apparent damage to circuit boards but corrosion is all around the cabinet. Venting of the furnace is fine and it doesn't smell from the outside of the house.
    • Heat exchanger is fine, but the insulation around it is peeling and could go at any moment.
    • There are 3 other major components that could go at any moment (blower, and two other things)
    • There is an overall lack of maintenance. Ducts have probably never been cleaned. Filters don't appear to have been changed for months, even though they recently passed an inspection. He replaced the filter anyway (does that help or hurt us?).
    • The humidifier attached to the furnace was non-functional.
    • At 16 years, the high efficiency furnace is likely past it's lifespan of 10-15yrs.

    So there are 4 components that could go at any time, and the humidifier is busted. But because there isn't a sign that the furnace is dead/dangerous, my agent says he doesn't think we can ask the sellers to replace the unit.

    I don't want to live with the risk of both the water heater and the furnace going at any time and not having available funds ($4-5k) to replace them both. I believe the furnace corrosion is a material latent defect we wouldn't have seen during a house showing, and a report on the counter is not appropriate disclosure.

    I assume we have leverage to negotiate as they are in a rush and we had the preferred offer, but I don't know how we can get these risks covered.

    What type of offer would you recommend in this situation? Should we sweeten the deal (win-win) by offering to clean the house or something?

    My idea is to ask $2500 for half the quoted replacement cost, plus replace the humidifier and get the ducts cleaned before possession.

    Deadline is tonight. Thank you.

    submitted by /u/MercurialMadnessMan
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    Do appraisals on undeveloped land take longer?

    Posted: 24 Jun 2020 09:53 AM PDT

    I am in the process of buying a piece of recreational property. There are no structures or utilities on the property.

    It was 5 weeks ago today that I submitted the signed contract. I am still waiting for the appraisal.

    My lender told me it would be completed and in their office last Friday. It is now Wednesday and to my knowledge it has not been completed, and the lender is not responding to my emails.

    My closing date, which I've already had to reschedule due to lack of an appraisal, is 2 weeks from today.

    Is it normal for an appraisal to take this long? Any tips on how to speed up the process?

    submitted by /u/SadFin13
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    Looking to buy first home, need some advice

    Posted: 24 Jun 2020 09:33 AM PDT

    My fiancé and I are looking to buy our first house within the next 6 months- year. However, I keep hearing "the real estate bubble is going to pop soon". Would it be smarter to wait longer? Was hoping to close on one by April but I'd like to grab it up for as low as possible.

    submitted by /u/Am821
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    What are thoughts on house prices in relation to mortgage interest rates?

    Posted: 24 Jun 2020 09:20 AM PDT

    I read that some people claim that the low interest rates have nothing to do with the average home price trend. I don't understand how that is the case, it appears to me that on average, when the mortgage rates go down, the housing prices go up usually. To say they have nothing to do with each other seems outrageous. My belief would be that people hear about the lower mortgage rates which I would say reasonably(without absolute data) will encourage buying and a lower mortgage rate lowers the monthly payment which also makes it more favorable for purchasing.

    1. Is it smart to consider mortgage rate percentage and volatility as an indicator of getting a good deal at current market value?
    2. What are the most important indicators for the mortgage rate percentage to go up or down?
    3. What is your personal guess on mortgage rate prices going up or down and how you came about it.
    4. If you had a child and they were buying a home right now, how would you feel about there financial decision?
    5. What are other important metrics to determine if a market is currently overvalued?

    ​

    submitted by /u/SadSky4
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    Closing on an auctioned house today!

    Posted: 24 Jun 2020 09:18 AM PDT

    Hey all! I'm looking for any advice anyone can give me that's been in a similar situation. I will soon be closing on a house that I purchased off an auction after the previous owner went into foreclosure. The kicker is that they still live in the house and the bank informed us it was our responsibility to inform them of the new ownership and to take possession of it ourselves. Any advice on how to go about doing that without them getting upset and destroying the place or gutting it and taking all the appliances would be appreciated!
    We live in a small town (less than 900 people) and everybody knows everybody so I don't think they would do something like that to cause a big scene and sully the rest of their family that lives in town too.

    submitted by /u/xxRookie69xx
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    Co-op board rejected buyers

    Posted: 23 Jun 2020 06:28 PM PDT

    Our co-op board rejected our potential buyers. (New York suburbs) It was a solid offer, comparable to market value and from what we hear there should have been no financial concerns. When asked for their reasonings we were told legally they couldn't disclose information. I understand that a board can basically reject for any reason but is it true that they can't legally share the reason why? Or is it more that they have the right to not disclose and are legally protected in that choice?

    submitted by /u/Cnoice
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    Should I buy or sell my home? Not sure how to calculate the return from renting. TIA

    Posted: 24 Jun 2020 08:41 AM PDT

    I have a 3 br/ 1.5 bath ranch home. Rentals look to be going for $1,600 for that in my area, for an unupdated home. My home's been updated and includes washer/dryer, fridge, microwave, and dishwasher. I think I could get $2,000 for it. Mortgage is $1,575. Can someone walk me through how to calculate the return and what costs to expect?

    If it's not feasible to rent, I suppose I will sell. Either way, I am continually trying to make minor improvements to the home to make selling or renting go smooth. Any advice is appreciated.

    submitted by /u/Redditrum_redditrum
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    New Construction Appliances/Service hookups

    Posted: 24 Jun 2020 08:37 AM PDT

    Many new homes come with appliances or at least service hookups for those appliances. Unless you build custom, you can specify pretty much what you want. One thing I never understood was the mindset of mixed service appliances. For example, my house has gas furnace, gas water heater, Even a gas fireplace starter. Oven is electric. The only thing I can think is that its cheaper or easier for the builder just slap electric oven in when everything else is gas. I think most codes now days require venting if a gas oven is installed which will of course cost more. At the same time they will go through the effort rigging your fireplace with a gas starter. Other than being cheap or laziness, is there a good reason for mixed use appliances in new construction (gas and electric)? I never understood this as this does not make any sense to me.

    submitted by /u/MK-82-ADSID
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    Mortgage Protection plans?

    Posted: 24 Jun 2020 08:23 AM PDT

    So I have enough life insurance my wife can pay off the condo in the event of my demise. But as soon as I signed on the dotted line people came out of the woodwork to offer me Mortgage Protection plans. Being a first time homeowner I naïvely filled in the paperwork for a few of them and I now regret my naïvete.

    Are any of these plans actually worth anything? These are perfect strangers just wandering up with stuff I could produce at Kinko's with just a little bit of motivation. They say they are backed by names I do recognize, but of course I have no proof of that either. Yes I could do research into the company is that they represent to see how their clients like them, but is this even worth my time? The only apparent appeal is the accelerated death benefit. But I'm sure that can be found elsewhere, right?

    submitted by /u/TheOccasionalDick
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    Refi lender went silent

    Posted: 24 Jun 2020 08:04 AM PDT

    I initiated a refi at the first of May. I have great credit and have about 50% equity in the house. I was told 6/1 that the loan was sent to underwriting, but since that time, the lender has gone dark and is unresponsive. I've emailed once and called two contacts, but have gotten no replies. I'm trying not to be a pest, but wish they'd let me know things are still moving along. Should I be concerned, or is this typical given the market, Covid, demand for inspections, etc.?

    submitted by /u/Motherleathercoat
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    Looking to buy in NJ in 6-12 months

    Posted: 24 Jun 2020 07:56 AM PDT

    Wife (35) and I (36) would like to move out NYC where we pay $2500 in rent, and buy a house in NJ. We are first time home buyer with credit score over 750. We both work in the city. We have a 1 year old baby/toddler(?)

    Household income: 270k per year Student loan debt: 20k at 3% and 65k at a 4.5 rate Combined 401k: 270k Liquid savings: 70k

    We are looking for houses no more than 450k. Any advice/guidance would be appreciated.

    submitted by /u/Mr_July
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    Lender has requested Competitor Correspondence

    Posted: 24 Jun 2020 07:41 AM PDT

    We have decided to go with a lender after negotiating down the rate. He has asked for a copy of our correspondence with the other lender we were talking to, and who he matched rates with. He said it's for legal purposes to have proof for why they're lowering their rate _so much_. I forget what law/regulation he mentioned.

    Is it legal to share correspondence that way? Do I have to confirm with the original lender to share their email? They had no disclaimer legalese in their emails.

    submitted by /u/junomeeks
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    203K Contractors

    Posted: 24 Jun 2020 07:36 AM PDT

    Hi everyone,

    So this is my first time diving into real estate and have found myself looking at a 203k for repairs. For the contractors, I have heard something about them having to be on the list...what does this mean? Can we not have a contractor of our choice do the work?

    submitted by /u/JR4506
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    Does the zestimate generally mean if the home is in perfect condition or does it just price the home based on the way it last sold?

    Posted: 24 Jun 2020 07:25 AM PDT

    I'm referring to the zestimate and/or the estimated home value on realtor.com.. Basically, we bought our home forclosed about 5 years ago and we've since added new flooring, all new stainless steel appliances, painted everything, complete bathroom remodel, waterproofed the basement, new landscaping, and added a shed. I'm wondering if that adds any value to the zestimate, or if we would have just had to sell significantly lower than the zestimate had we not done these things? It almost feels like these updates are for nothing because the home will sell quickly regardless of it's condition with the market being so hot right now. Any insight would be greatly appreciated! Edited to add: does the zestimate come from the condition of the home the way the home was last sold then, or is it just the estimated value of the home completely updated.

    submitted by /u/KeepMovingForward11
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    Buying in a different state (first time buyer). Best practice and advice appreciated.

    Posted: 24 Jun 2020 07:24 AM PDT

    The real estate market in my area is very bad. I have been monitoring it for years now and it makes more sense to rent here (Miami). I have opportunities in colorado and am looking in that area. I have time to look and I am starting from scratch as a first time buyer. Going out there to spend a week later this summer and to get a feel for the areas and look at some townhomes that I have found on Zillow.

    Having never been through this process I'd like to learn the best practice. I was thinking it would make sense to 1. get prequalified and 2. Find a buyers agent (not ure the best way to do this).

    Are these the right first moves? My timeline to buy is not that pressing yet. I have 6 months minimum, so I'd like to do this right and leverage any benefits to me as a first time buyer as well.

    Open to any suggestions or links that you think I should follow. I'm assuming I should get a buyers agent in CO since I'm buying there but any other advice is welcome.

    submitted by /u/itssexitime
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